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26 Cards in this Set
- Front
- Back
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national income accounting
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records all the expenditures that contribute to a country's income and output
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balance of payments accounting
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helps us keep track of both changes in country's indebtedness to foreigners and the fortunes of its exports
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GNP
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GNP= GDP + income coming from abroad
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Income (Y) =?
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Y= C + I + G + EX-IM
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CA
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Current account. the difference between exports of goods and services and imports of goods and services . CA= EX-IM
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S
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National Savings- porton of output ( Y) that is not devoted to consumption or government spending . S= Y - C - G or S= I + CA
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Sp
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Private savings, defined as the part of disposable income that is saved rather than consumed.
S[ = Y -T - C, t= tax |
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Financial account
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of the balance of payments records all international purchases or sales of financial assets.
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Capital account
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Non financial asset movements
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Balance of payments
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this balance is the sum of the current account and capital account balances less the nonreserve portion of the financial account balance and it indicates the payments gap that offical reserve transactions need to cover
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Intrest rate
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the amount of that currency an individual can earn by lending a unit of the currency for a year.
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intrest parity condition
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the condition that the expected returns on deposits of any two currencies are equal when measured in the same currency.
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all else equal a rise in interest causes the demand for money to
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fall
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an increase in real output ____ interest rate, given the price level and the money supply
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Raises
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Inflation
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when its price level is rising and long run position
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deflation
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when its price level is fallen.
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nominal intrest rate
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which are rates of return measured in monetary terms
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real interest rates
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which are rates of return measured in real terms, in terms of countries output
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all things equal, a real depreciation of the currency improves/worsens the current account.
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improves
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Ep*/P
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real exchange rate
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Yd
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disposable income
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Y
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output
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monetary policy
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which works though changes in the money supply
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fiscal policy
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which works through changes in government spending or taxes
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J-curve
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j-curve describes the time lag with which a real currency depreciation improvs the current account .
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inflation bias
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using stimulation of the economy for political purposes
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